Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cia de Transmissao de Energia Eletrica Paulista (BSP:TRPL10.PFD, Financial) reported a significant increase in financial performance, with net revenue growing by 24.7%, EBITDA by 29.7%, and net income by 62.9% in the second quarter of 2024.
- The company successfully raised BRL1 billion through its 16th issuance of debentures at a competitive cost, supporting its growth strategy.
- Investments in greenfield projects and retrofitting have been substantial, with a 69.6% increase in investments, ensuring long-term company longevity and asset reliability.
- The company maintains a strong credit rating, with Fitch reaffirming its AAA rating on a local scale, highlighting its predictable and inflation-protected revenue streams.
- Cia de Transmissao de Energia Eletrica Paulista (BSP:TRPL10.PFD) continues to focus on sustainable growth, balancing financial discipline with environmental and social impacts, and maintaining a minimum dividend payout of 75% of regulatory net income.
Negative Points
- The reduction in the economic component of the RBSE is expected to decrease revenues, with a 9% reduction in total RAP for Contract 059.
- The company faces challenges with the periodic tariff review process, which has led to adjustments and potential revenue reductions.
- There is uncertainty regarding the future financial impact of the RBSE, which is expected to end by 2029, necessitating strategic adjustments.
- The company decided not to participate in the September transmission auction, potentially missing out on new opportunities due to a focus on existing projects.
- The ongoing regulatory discussions and potential changes in indemnification values related to RBSE create uncertainty in future financial planning.
Q & A Highlights
Q: Does the Company have any positioning in participating in the September transmission auction? How do you see the concession renewal projects?
A: For the September auction, we have decided not to participate due to our focus on executing a significant pipeline of BRL15 million. Regarding concession renewals, discussions are ongoing, but the current case is small, accounting for only 0.5% of our revenues.
Q: What is the financial impact for the upcoming years without RBSE?
A: The financial impact of RBSE is already accounted for in our management plans. By 2029, we expect to have an RAP of BRL1 billion from new developments, reducing dependence on the renewed Contract 059. We have BRL5 billion in approved investments for 2024-2028, which should offset the RBSE reduction.
Q: Could you give us an update on the process to include the batteries of the capacity reserve auction and company's perspectives regarding when the auction would take place?
A: The capacity reserve auction expected in August has not been scheduled yet. If it occurs this year, it will likely be at the end of the year, but we do not expect batteries to be included. A bidding process including batteries is anticipated for 2025.
Q: What are the company's growth targets for the next 10 years? Will it participate in more auctions or maintain its current portfolio?
A: Our strategy focuses on profitable growth, financial discipline, and dividend payments. We have a BRL15 billion portfolio for the next five years and plan to pursue new concessions and sustainable growth in our retrofit and improvement projects.
Q: Is there any estimate of dividend to be distributed in 2024?
A: We do not have a set periodicity for dividend distribution but aim to maintain our practice of distributing at least 75% of regulatory net income, aligning with company and shareholder interests.
Q: Could you please talk about the price adjustments in July? Was it expected or will it impact the capital structure?
A: The tariff cycle update was expected and has been accounted for. It will not impact our capital structure or future capital raising.
Q: What is your vision about the future of the financial component of RBSE?
A: The current regulation mandates payments by 2028. We await ANEEL's final decision on any claims before providing further comments, but we trust in ANEEL's role in maintaining contract stability and regulatory robustness.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
